What actually makes an NDA enforceable in India
An NDA downloaded from the internet often fails where it matters. Here is what courts look for — and the clause that Indian law will not enforce.
Accellaw Editorial
Non-disclosure agreements are signed so often that they are treated as formalities. But when confidential information actually leaks, the quality of the drafting decides whether you have a remedy.
Define the information precisely
"All information shared" is too broad to be meaningful. A good NDA describes the categories of information covered, how it is marked or identified, and the standard exclusions — information that is already public, already known to the recipient, or independently developed.
Limit the purpose
The recipient should only be allowed to use the information for a stated purpose, such as evaluating a partnership. Use outside that purpose is then a clear breach.
Be careful with non-competes
Section 27 of the Indian Contract Act, 1872 makes agreements in restraint of trade void, with a narrow exception for the sale of a business's goodwill. The Supreme Court has upheld restrictions that apply during a contract (Niranjan Shankar Golikari v. Century Spinning, 1967) but held that restraints operating after it ends are void (Superintendence Company of India v. Krishan Murgai, 1980). Confidentiality obligations are generally enforceable; a clause that stops someone from working in a field after the relationship ends usually is not. Bundling an aggressive non-compete into an NDA can weaken the whole document.
Make it a valid, stamped contract
An NDA is a contract like any other: it needs parties with authority to sign and a lawful purpose. It also attracts stamp duty under the state Stamp Act, and an unstamped agreement cannot be relied on as evidence until the duty and penalty are paid. Electronic signatures under the Information Technology Act, 2000 are valid for NDAs.
Plan for the breach
- Include a right to seek an injunction — money alone rarely fixes a leak, and courts can restrain a breach under the Specific Relief Act, 1963
- Do not rely on a large penalty clause: under Section 74 of the Contract Act, courts award only reasonable compensation up to the stated amount
- Require return or destruction of information on request
- If personal data is shared, align the obligations with the Digital Personal Data Protection Act, 2023
- Choose governing law and a forum that is practical for you